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Purisima prefers higher tobacco tax increases

Purisima prefers higher tobacco tax increases

Published on Thursday, 22 November 2012 00:00

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said he would have wanted higher tobacco tax increases to maximize health gains.


While he would have preferred higher tobacco tax increases, Finance Secretary Cesar Purisima thanked and congratulated the Senate for the passage of the excise tax reform bill on the third and final reading.

The Senate approved Senate Bill No. 3299, also known as “An Act Restructuring the Excise Tax on Alcohol and Tobacco Products,” on Tuesday evening with 15 senators in favor of the excise tax proposal, while two voted against it.

SB 3299 is expected to generate P40 billion in incremental revenues from both tobacco and alcohol products on the first year of its implementation.

The expected incremental revenue to be generated under the said “sin tax” version is higher than the P15 billion to P20 billion that Senator Ralph Recto’s version would raise, and the P31.3 billion revenue that House-approved bill proposed to raise.

The estimated revenues under the Senate approved bill, however, are lower than the P60 billion expected under the original excise tax proposal backed by the Department of Finance.

“While we would have wanted higher tobacco tax increases to maximize our health gains, we understand that we work within the rigors of the legislative process to achieve our reforms,” Purisima said.

“We will continue to work closely with our partners in Congress in the bicameral conference committee to ensure that we optimize the health and revenue gains from this urgent reform agenda of President Aquino,” the finance chief added.

Purisima congratulated and thanked the Senate for the passage of the excise tax bill and also advocates who pursued the “sin tax” reform.

He said that the passage of the excise tax reform bill fulfills the Aquino administration’s objective of reaching P40 billion in incremental revenues in the first year and collecting funds to help finance universal health care.

“The version also provides moderate tax increases to protect the young and the poor from the ill effects of smoking and excessive drinking, achieving a unitary tax rate at P26 per pack with an excise tax burden of 60 percent on tobacco products in the fifth year, close to World Health Organization and World Bank recommended levels,” Purisima said.

Under SB 3299, tobacco products will account for the bulk of the P40 billion incremental revenues, with tax contributions estimated at P24 billion.

The remaining P16 billion will come from taxes on fermented liquor and distilled spirits.

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